Real Estate Development Expert Witness Violates Rule 26 by Offering an Opinion on the Causation Issue
Posted on January 13, 2025 by Expert Witness Profiler
H5R owns a single-family home (the “Property”) in Dallas, Texas, for which Scottsdale Insurance issued an insurance policy covering certain causes of loss. In February 2021, water allegedly entered the Property through or near the roof. H5R “immediately notified” Scottsdale Insurance and filed a claim for this incident. More than one year after the claim was filed, Scottsdale Insurance sent H5R a letter denying the claim dated June 17, 2022.
H5R contended the Property was damaged by hail during the insurance policy period – a covered loss event. But Scottsdale Insurance denied that a hail event during the policy period caused the alleged damage.
H5R and Scottsdale Insurance designated experts to opine regarding the alleged damage under Federal Rule of Civil Procedure 26(a)(2). H5R designated Terry Moore, a purported construction expert, and included Moore’s report regarding the extent of damage to the Property and cost of repair.
Scottsdale Insurance filed a motion to strike Moore’s opinions and testimony because his designation and report failed to comply with Federal Rule of Civil Procedure 26.
Real Estate Development Expert Witness
Terry Moore is the founder and president of the Garrett Moore Company, a commercial real estate development firm that, since 1977, has developed over 22,000,000 square feet of property. This portfolio includes, but is not limited to, retail and office spaces, 45,000 apartment units, Caribbean resorts, assisted living facilities, and senior resort-style living communities.
With over 45 years of experience in the real estate market, Terry Moore has a proven track record of success in the industry. He is a 1977 graduate of the University of Oklahoma, holding advanced degrees in Architecture.
Discussion by the Court
Scottsdale Insurance asserted that Moore’s expert disclosure “omits key information required under Rule 26(a)(2)(B) – specifically ‘a complete statement of all opinions the witness will express and the basis and reasons for them’ and ‘the facts or data considered by the witness in forming them.’” And it contended that, in Moore’s deposition, he opined on issues that he was not designated for or provided a report on – particularly those involving causation (i.e., that hail caused the alleged damage to H5R’s Property).
Moore testified that the report contained a complete statement of all his opinions and underlying facts or data. And he confirmed that his report did not contain a causation opinion.
In response, H5R asserted that Moore was properly designated to provide
his opinion regarding the Property’s repair costs. And it argued that “[t]here is no requirement that Moore’s report provide opinions regarding cause or date of damage, as these topics were not part of his designation,” and that, when asked about these issues during the deposition by Defendant’s counsel, he
“simply answered the questions.”
But, in its summary judgment response, the Court found that H5R relied on Moore’s deposition testimony regarding the causation issue – more than once despite conceding that the topic “was not part of his designation.”
H5R has not provided a justification for its noncompliance with Rule 26(a)(2),
and, so, the Court turns to whether its failure to disclose was harmless by evaluating certain factors.
How Important the Evidence is
The first factor of the harmlessness analysis – how important the evidence is
– weighs in favor of exclusion.
According to the Court, H5R’s argument that Scottsdale Insurance “ignores its own evidence” demonstrating that “the damage was caused by hail” indicates that Moore’s testimony is duplicative or of minimal importance.
Prejudice to the Party Opposing the Admission of the Evidence
The second factor – prejudice to the party opposing the admission of the
evidence – also favors exclusion.
H5R initially alleged that the Property damage was caused by a snow and ice
event or a broken pipe. But H5R relied on Moore’s deposition testimony in its summary judgment response for the proposition that hail caused the damage, despite conceding that the topic “was not part of his designation” or in his expert report.
And, so, the Court found that Scottsdale Insurance has been prejudiced because H5R failed to provide Scottsdale Insurance’s counsel with notice regarding the scope of his expert testimony and “now faces a newly alleged cause of loss and new opinions about the alleged damage deep into the case, with discovery now closed.”
Possibility that a Continuance Could Cure any Prejudice
The third factor – the possibility that a continuance could cure any prejudice – weighs against exclusion because the Court vacated the trial setting and all pretrial deadlines in May 2024.
The Explanation for the Party’s Failure to Disclose
The fourth factor – the explanation for the party’s failure to disclose –
favors exclusion.
H5R asserted that Moore was not required to provide opinions regarding causation in his report since he was not designated as an expert on that
topic and, when asked about it during the deposition by Scottsdale Insurance’s counsel, he “simply answered the questions.”
But, in its summary judgment response, H5R attempted to present Moore as an expert on causation, which is an issue central to the resolution of this case. And, so, the Court is not persuaded by H5R’s explanation.
Held
Considering these four factors holistically, the Court concluded that H5R’s noncompliance with Rule 26(a)(2) is not harmless and that Moore’s testimony should be excluded under Rule 37(c)(1).
Key Takeaway:
H5R has not provided a justification for its noncompliance with Rule 26(a)(2). Because Moore “provided several undisclosed opinions in his deposition” about issues that he was not designated to opine on, including the source of alleged damage, the Court concluded that H5R’s noncompliance with Rule 26(a)(2) is not harmless.
Case Details:
| Case Caption: | H5r Llc V. Scottsdale Insurance Company |
| Docket Number: | 3:23cv1197 |
| Court: | United States District Court, Texas Northern |
| Order Date: | January 10, 2025 |
